Ingenious enters joint venture

Profiles in Finance: Ingenious Media

For “Avatar” co-financier Ingenious Media, its joint venture with Fox Searchlight to make British films marks a natural evolution of its business.

The partnership bridges the studio and indie sides of the London-based private equity boutique’s film activities.

It invests several hundred million dollars into 10 to 15 major studio movies a year, most frequently with Fox. But it also has a sideline in providing equity for smaller U.K. indie projects, such as the upcoming Robert Pattinson romance “Bel Ami” and “Monsters 2.”

“We see our deal with Fox Searchlight as a natural extension of our single picture business and our relationship with Fox,” says James Clayton, CEO of the company’s investment arm. “It’s much easier to attract equity risk capital if you’ve got worldwide studio distribution to rely on.”

Ingenious and Fox have poached Lucas Webb from the Weinstein Co. to spearhead the joint venture. His task will be to find two to three projects a year in the $10 million-$15 million range. “It will be impossible to avoid developing,” Clayton says. Ingenious will provide its typical 20%-30% of budgets, with Searchlight handling worldwide rights.

Under its existing informal relationship with Fox, Ingenious has already invested in a few Searchlight pics from British producers, including “The Best Exotic Marigold Hotel,” “Never Let Me Go” and “127 Hours.” “We’re fans of what they do, so it made sense to combine,” Clayton says.

Another expanding area for Ingenious, which also owns a stake in foreign sales outfit Protagonist Pictures, is cashflowing pre-sales for indie projects. It raised around $20 million last year for such relatively low-risk deals under the U.K.’s Enterprise Investment Scheme tax shelter. But Clayton says there’s a growing appetite among investors, particularly after the government recently sweetened the EIS tax break, which might also make it worthwhile to start providing riskier gap finance.